OKX announces user compensation plan in wake of OKB price crash

Crypto exchange OKX faced significant market turbulence this week as its native token, OKB, experienced a nearly 50% drop in value in a brief timeframe.

OKX has informed its 393,100 followers on X of a comprehensive internal plan to resolve existing issues and has pledged to compensate its users for any additional losses resulting from abnormal liquidation.

“The platform will fully compensate users for additional losses caused by abnormal liquidation. The specific compensation plan will be announced within 72 hours,” the exchange stated.

As of the latest update, the OKB token is priced at $47.04, marking a 13.55% decline over the past week. However, on Jan. 23, the token saw a steep fall from $52 to $25, almost halving its value and causing considerable distress among investors.

OKX plans to implement enhanced measures to address future market volatility, including optimizing spot leverage gradient levels, revising pledged lending risk control rules, and refining liquidation mechanisms. The goal is to prevent similar market fluctuations from adversely impacting investors’ large leverage positions.

However, the crypto community on X has expressed skepticism regarding the situation, focusing on the $10 billion market capitalization of OKB and concerns over how a $10 million sale could precipitate a 50% drop in its price.

One user emphasized the urgent need for corrective action to prevent further decline, while another speculated that the drop could be attributed to a ‘whale‘ – a term used for entities holding large amounts of a crypto token – liquidating their holdings.

Leveraging in cryptocurrency, involving the use of borrowed funds to amplify investment returns, is a double-edged sword, offering high rewards but equally high risks. OKX currently offers leverage options of 10x and 20x under full liquidation mode.

The market is also influenced by flash crashes, often triggered by the thin liquidity spread across various platforms. For OKB, a market depth of 2%, which gauges the capital needed to shift an asset’s price by 2%, lies between $224,000 and $184,000. This means a sell order exceeding $224,000 could potentially trigger another price cascade.